(Reuters) - The Zele Velkovic factory in Leskovac, once famous for its thriving textile industry, was one of the city's biggest when Yugoslavia started to implode in 1991.

The next two decades brought a slow decline fueled by chronic mismanagement and a dramatic loss of competitiveness. Where more than 600 worked, now just 70 walk the factory's cavernous halls, the deafening hammering of its old industrial looms barely disguising the emptiness.

Across the street, however, a factory hums and buzzes with the sound of modern machinery, looking like a sleek and shiny spaceship parked in a scrapyard.

Germany's Falke clothing producer is one of a handful of new arrivals to Leskovac, local proof of the recent textile revival around parts of Europe as some manufacturing is relocated from increasingly costly Asia.